Simply Finishing College Offers the Best Chance to Gain Financial Education

A new report paints a dim picture of success in college. Meanwhile, the failed pursuit of a college degree leaves many in a financial straight jacket: They owe tens of thousands of dollars in student loans and have a diminished capacity for knowing what to do about it.

In the muddied global effort to teach young people about money, one thing has become clear: college graduates pretty much have, or through experience and learning ability soon will acquire, enough personal finance smarts to effectively manage that part of their life.

This is important because countries from New Zealand to the U.K. to the U.S. are steaming ahead with research, trying to understand how to teach school kids about budgets, insurance and credit in a way that will make a difference in their adult life. The thinking: Give them the tools to manage their money and maybe we can avoid the next financial crisis.

Yes, most of the recent financial mayhem occurred at an institutional level. But if fewer adults had bought self-destructing mortgages or maxed out their credit cards, and more had squirreled away an emergency fund, the Great Recession might not have been so great.

No one has quite figured out how to best impart financial education on a broad scale. But the college piece, at least, seems solid. If you graduate, you’ll likely know enough to generally stand clear of things like late fees, financial penalties, high interest costs and investment scams.

But you have to graduate, and that’s the problem. Most kids don’t even go to college, and a new report from the nonprofit Complete College America paints a dim picture of graduation rates among those who do enroll.

Full-time students are the most likely to graduate (60.6% seeking a bachelor’s degree graduate within eight years). But such students make up only a quarter of the college population. The vast majority (75%) are part-time students, and of those seeking a bachelor’s degree just 24.3% graduate. From the report:

“More students are working, and they are working more hours than ever before. Many can afford to attend only part-time, extending the years until they graduate. … As the clock runs and the calendar turns, we all know what happens: Students’ lives fill up with jobs, relationships, marriages, children, and mortgages; the list goes on and on. Not surprisingly, college often gets left behind: a few years of courses, no degree, and a lot of debt. … The result is a yawning skills gap caused by too few trained workers for more high-skill jobs than ever. Incomes shrink. And America falls further behind.”

The report assembled data from the public colleges and universities of 33 co-operating states. It isn’t clear why the other 17 chose not to play. But given the gravity of the subject they should probably be embarrassed. Choosing Texas as a representative sample, The New York Times noted:

“In Texas, for example, of every 100 students who enrolled in a public college, 79 started at a community college, and only 2 of them earned a two-year degree on time; even after four years, only 7 of them graduated. Of the 21 of those 100 who enrolled at a four-year college, 5 graduated on time; after eight years, only 13 had earned a degree.”

The Times went on to note that despite decades of steadily increasing enrollments, colleges have made little progress in improving the percentage of those who make it to the finish line. Complete College America concluded, in part:

“States must get serious that graduation, not just enrollment, is the goal. Showing up isn’t enough. Colleges need incentives to ensure that their students also finish up. States should set completion goals, statewide and by campus. And they should tie at least part of colleges’ funding to their success in meeting these goals.”

Higher education, of course, is important for many reasons that have nothing to do with personal money management. Employability is the big issue. Yet at a time when it is has become increasingly important for individuals to be able to understand their investments, credit cards and retirement planning — and such knowledge is closely correlated to a college degree — it would be nice if more students finished what they started.

The failed pursuit of a college degree leaves many in a financial straight jacket: They owe tens of thousands of dollars in student loans and have a diminished capacity for knowing what to do about it.

Dan Kadlec is a journalist who has written about personal finance for TIME and other outlets for 25 years. He is the author of three books, a leading voice in the global financial literacy movement, and strategic adviser to the National Financial Educators Council.

Kadlec's latest is A New Purpose: Redefining Money, Family, Work,Retirement, and Success